G.R. No. 982. January 04, 1904

The plaintiff, Lim-Juco, sued the defendant, Lim-Yap, for damages in
the sum of 13,000 pesos for breach of a contract to insure a cargo of
rice. The defendant in his answer denied that he was under any
obligation to pay this sum, upon the ground that the second contract of
insurance represented by the policy introduced in evidence by the
plaintiff is void.

The court below, in view of the evidence adduced by the parties and
in consideration of the facts admitted and agreed upon between them,
rendered judgment for the defendant, with the costs against the
plaintiff.

The complaint upon which it is sought to recover this sum of 13,000
pesos as damages is based upon the failure of the defendant to fulfill
his obligation of executing a valid and enforceable policy of insurance
upon a cargo of rice.

The parties litigant agree that long prior to June 14, 1900, when a
contract of insurance was entered into between the plaintiff, Lim-Juco,
and the defendant, Lim-Yap,as representative of the King Yuen Insurance
Company, Limited, insuring 3,000 sacks of rice, valued at 13,000 pesos,
loaded on the barkentine Registro,
they had entered into the agreement which appears in section 9, page 2
of the bill of exceptions. This agreement, the plaintiff contends,
constituted a contract of insurance between him and the firm of Germann
& Co., the agents of La Federal Insurance Company, for the insurance of the same 3,000 sacks of rice above referred to for their total value.

The brig in question, which sailed from the port of Dagupan June 15,
1900, for this city, carrying the 3,000 sacks of rice so insured, was
wrecked on the following day, the 10th, near the port of Vigan, Island
of Luzon, the entire cargo being lost. On the 17th of the same month
Pio Acosta, the skipper, together with some of the members of the
shipwrecked vessel, entered, before the customs inspector in the port
of Vigan, a ship’s protest in due form, with respect to the said
shipwreck. Upon their arrival in this city this protest was repeated
before the notary public, Enrique Barrera. Of all these facts the
defendant had immediate notice.

The plaintiff has been completely indemnified for the loss of the 3,000 sacks of rice which went down in the wreck of the brig Registro.
On the 11th of August, 1901, he received from the firm of Germann &
Co. the sum of 13,000 pesos, the amount of insurance underwritten by
that firm in favor of the plaintiff. (Bill of exceptions, pp. 6 and 7.)
The manager of the firm testified to this fact, and stated that he had
written a letter to the defendant notifying him that he had paid the
amount of the insurance on the lost rice belonging to the plaintiff,
Lim-Juco.

Article 782 of the Code of Commerce provides that if different
contracts of insurance have been entered into concerning the same
thing, in the absence of fraud only the first contract shall subsist,
provided it covers the full value of the thing insured. Subsequent
insurers shall be relieved from responsibility, and receive one-half of
1 per cent of the amount insured.

If the first contract does not cover the entire value of the thing
insured, then the liability for the excess shall fall upon the
subsequent insurers in order of priority.

The only error assigned by the appellant is that the court erred in
rendering judgment for the defendant and in imposing the costs upon the
plaintiff, Lim-Juco.

The plaintiff has not demanded from the defendant, Lim-Yap, the
value of the rice insured by him as agent of the Panag Khean Guan
Insurance Company, Limited, nor has he affirmed or denied the validity
or enforceability of the policy executed in his favor by the defendant,
notwithstanding the fact that it was the second contract of insurance
upon the same thing.

The plaintiff, Lim-Juco, realizing that no action had accrued to him
and that his policy was unenforceable from his point of view—that is,
for the reason that it was defective in form and not because of the
existence of a former contract of insurance covering the same 3,000
sacks of rice—commenced this suit against the insurance agent to
recover damages for the amount of the injury occasioned by the loss of
the rice. The action was based upon the alleged nullity of the policy,
which in the opinion of the plaintiff was deficient and had been
executed without the formalities required by law.

We do not deem it necessary to make any decision as to the
conditions of the said policy, inasmuch as the plaintiff has not
suffered damage by reason of the deficiency resulting from a failure to
comply with the formal requisites prescribed by article 738 of the Code
of Commerce.

The unenforceability of this policy, even if all the legal
formalities had been complied with in its execution, is due to the
prohibition established by the law against the double recovery of the
value of a cargo of property insured and lost by any maritime accident.

It is a fact disclosed by the evidence that the plaintiff has
recovered the entire amount of the value of 3,000 sacks of rice insured
and subsequently lost by the wrecking of the vessel. Therefore, in
accordance with the provisions of article 782 of the Code of Commerce,
the second or subsequent insurer, the defendant herein, is free from
all liability. The law will not permit Lim-Juco, after having collected
from Germann & Co. an amount in excess of the value of the rice
insured, to collect for the second time from a second insurer. The
latter’s obligation in the premises has been annulled by the provisions
of the law.

It is unnecessary to discuss the conditions of the contract of
insurance signed by Germann & Co. on behalf of the Federal
Insurance Company, in view of the unquestionable fact that the
plaintiff collected and received from the said firm more than the
entire value of the rice lost. For this reason, whatever may have been
the defects in the policy issued by the insurer, no action has accrued
to the plaintiff for the recovery of damages. Upon the facts of the case
there is no law which sanctions such an action. It is a demand as
unjust as it is immoral, and seeks to elude the prohibition of a double
recovery of the value of property insured.

As the second contract of insurance entered into is null and void
and therefore, by express provision of the law, produces no obligation
with respect to the Chinese company represented by the defendant, the
plaintiff having recovered the total amount of the insurance from the
first insurer, there is no legal reason upon which the agent of the
company can be compelled to pay the amount of the second policy of
insurance, from which, as above stated, this agent was freed by
operation of law. Neither can an action for damage be successfully
maintained against the agent, as none of the articles of the Code of
Commerce which deal with commission agents, factors, and clerks create
such an obligation. Nor is such an obligation created by any of the
articles of the same code concerning marine insurance.

For the reasons given, the action against the defendant, Lim-Yap, is
dismissed and the judgment below affirmed, with the costs to the
plaintiff. Judgment will be entered and the case remanded to the court
below twenty days from the date of the Notification of this decision.
So ordered.

Arellano, C.J., Cooper, Willard, Mapa, and McDonough, JJ., concur.

Johnson, J., did not sit in this case.